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The secretary of the Bali Hotel and Restaurant association, Perry Markus, said it would be "very odd and very bad" for Bali to try to market itself as an international tourist destination if it could not offer alcohol to guests.

Bali's alcohol-fuelled nightlife would be devastated by a ban on alcohol. Photo: Jason Childs

The Bill for a Ban on Alcoholic Drinks was drafted by the Islamic-based United Development Party, a member of Susilo Bambang Yudhoyono's governing coalition.

The strict ban would be "applied nationwide within the territory of the Unitary State of the Republic of Indonesia", the bill says.

Those who produce alcoholic drinks would be subject to penalties of up to 10 years imprisonment and 10 billion rupiah ($1.05 million) in fines; there would be $520,000 in fines and five years in prison for those who distribute them, and two years imprisonment and a $20,800 fine for those who consume alcohol.

Indonesia is a Muslim majority country, where most of the population refrains from drinking. But alcohol is freely available in nightclubs, bars and some cafes.

In regions like Bali, the economy relies heavily on tourism, which includes a heaving, alcohol-fuelled night life.

However, the ban is part of a heavy 2013 legislative agenda in a notoriously gridlocked and slow-moving parliament. It may never even be debated, let alone passed.

In 2008 a bid by Islamic politicians to ban the bikini was over-ruled after protests from the tourist industry.

The anti-alcohol law's proponent, United Development Party MP Ahmad Kurdi Moekri, told Fairfax Media the proposal was "to safeguard the nation's morals".

"It is the mandate of our constitution, it's about character building," he said.

Mr Ahmad, a member of the national parliament's Commission III overseeing legal affairs, said alcoholic drinks "have a greater negative impact on the nation than positive, and anything negative to the nation is the nation's enemy".

But he warned outsiders not to interpret the legislation as an act of religious radicalism.

"We should not take the stance … that, since the bill was proposed by a party of certain religious background, that it might lead to turning the country into a religious-based state," he said.

"It's such a small-minded approach."

The United Development Party (PPP) has 39 representatives, or 7 per cent of the seats in the 560-seat parliament.

Indonesian brewer, Bintang, maker of the favourite beer among Australians travelling in Bali, declined to comment, a spokeswoman saying it was a "very sensitive subject" for them.

Mr Markus said a few months ago supply constraints meant that some restaurants and hotels had trouble re-stocking their supplies of alcoholic drinks, and even that had shown up in a downturn in trade.